Kate Rivett-Carnac: DBSA, tourism specialist

As finance becomes harder to access, the Development Bank of Southern Africa has announced a new strategy to prioritise tourism projects in sub-Saharan Africa. TradeInvestSA spoke to Kate Rivett-Carnac, tourism specialist at the DBSA, about the bank’s new strategy and how it plans to implement it.

Tourism has become an increasingly important part of African economies, with millions flocking to the continent each year in search of unspoilt natural beauty and the history and culture of each region.

This is particularly the case in southern Africa, where – with the exception of Zimbabwe – most countries have seen their tourism industries grow exponentially in recent years following their moves towards more democratic and stable regimes.

South Africa was the destination for nine-million visitors in 2007, and while the final months of 2008 saw a drop-off in numbers following the financial crisis, the figure is still expected to rise to 10-million in 2010 as the country hosts the FIFA World Cup.

The recent financial crisis has placed the tourism industry under threat, however, as it threatens not only the number of visitors to the region, but also the financing of various tourism projects.

Countering this effect, the Development Bank of Southern Africa (DBSA) recently stepped in to announce a new strategy designed to prioritise tourism projects in South Africa and the SADC region.

“Given the current global economic downturn, the DBSA is well positioned as a leading development finance institution with a counter-cyclical mandate to invest in tourism infrastructure at a time when commercial finance institutions may take a more cautious view,” says Kate Rivett-Carnac. 

The tourism projects the DBSA is focusing on fall into five distinct categories: anchor projects, clusters of small businesses that together achieve scale; community partnerships; transport infrastructure and projects with the ability to draw new or underserved markets. 

She notes that while the DBSA provides loan finance for the projects, it also “provides technical assistance grants for planning for projects where the client is an NGO, community based organisation or government entity.”

The DBSA has been working within the field of tourism for some time and has already funded numerous plans around the country. Currently it is finalising local tourism plans for the Cacadu District Municipality in the Eastern Cape.

So what kind of investments is the DBSA looking to help finance?

“We are interested in supporting investment into businesses that can draw new markets into the areas in which they are situated. So the ‘new market’ opportunity relates particularly to complementing the product offering that already exists in an area,” says Rivett-Carnac.

As an example she highlights a current initiative that the DBSA is supporting for the development of an agri-tourism cluster in the Eastern Cape.

There are some stipulations to the investment, however. The DBSA says it will only consider medium to large sized tourism projects, which equates to an investment amounting to more than R20 million in South Africa or US$10 million in SADC countries.

There is no maximum value to the investment, but the DBSA would “look at co-financing with other funders if we felt a project was too big for us alone,” says Rivett-Carnac. “This seldom happens in tourism and is more common in energy and other infrastructural sectors,” she adds.

While the bank has also said that it will consider smaller ventures, it does specify that this would likely be through supporting clusters of small businesses rather than an individual business, as the creation of tourism clusters can create a destination effect.

“We are more likely to get involved in technical assistance for planning of these clusters (like tourist routes, for example) than in the financing of the actual businesses in the cluster,” she adds.

“This would relate to the socio-economic impact of investments and would include considerations like broad-based ownership, employment, training and skills transfer, supplier development and the like,” says Rivett-Carnac.

In South Africa the tourism industry is still clearly centred on the traditional hotspots of Cape Town, Johannesburg and Durban, so is the DBSA likely to focus its efforts on growing the tourism industry outside of these well-developed regions?

Rivett-Carnac says that while the DBSA is “definitely interested” in those areas outside of the metros, the bank also looks at all possible projects and will always consider initiatives in  the metros.

“We work across the country, and have a particular mandate to try and support development in rural areas. The same goes for other countries in SADC too,” says Rivett-Carnac.

So with the bank’s focus being across the southern African region, rather than just South Africa, is there a budget in mind for particular countries?

Rivett-Carnac says the DBSA does not have specific budgets in mind for certain countries, as projects will be evaluated on an individual basis, but adds that she does expect the funding to be concentrated on the more stable countries.

“There are naturally certain countries in the region where market growth is greater, and the enabling environment is more in place – for example Zambia, Mozambique, Tanzania, amongst others  - and so we are more likely to be able to support deals in these countries,” she adds.

Established tourism investors with projects valued at more than R20-million can get in touch with the bank directly by visiting the website at DBSA or by emailing Kate Rivett-Carnac on: kater@dbsa.org.